Just how much ground do you give?

Reuters has an article this morning continuing the rumors about Vatican-China relations being on the mend:

HONG KONG (Reuters) - China and the Vatican could re-establish diplomatic relations by the 2008 Beijing Olympics, Cardinal Joseph Zen, the most senior Roman Catholic clergyman in the country, said on Monday.

One line got my attention, however:

A sticking point has been that Beijing refuses to allow the Vatican to name Chinese bishops unilaterally, which is the usual procedure. Zen said the Pope could give some ground on the issue.

This situation seems to have a parallel in the recent debates about healing the schism with the SSPX. In both cases it seems the Vatican is willing to "give some ground" for a higher good. However, in both cases the initial responses (or at least the public ones), have hardly been very favorable. The leaders of China and the SSPX haven't changed their tack at all.

So where lies this new-found hope of union? In the Vatican renouncing all or part of its claims? Certainly reunion isn't possible with either group the way matters stand and, as much as I'd love to see both these situations be resolved peacefully (and quickly), the pessimist in me isn't very confident. One of the compromises suggested by Cardinal Zen in the article is a "veto power" being given to the Chinese leaders. I really can't believe the Vatican would tolerate that kind of encroachment. And SSPX has recanted none of its hard-line views on Vatican II as far as I know.

Have I missed something?